There is nothing more convenient than that of doorstep loans. You need money, and cash is delivered right at your doorstep. When it’s time to pay, your money will be collected from your home, too. If you have any concerns about your loan, you can talk to an agent face-to-face in the very comforts of your home. What more can you ask for?
Now, before you go taking out doorstep loans, it might be a good thing to learn more about it first. So, here are some bits and pieces about doorstep loans that would help you make a sound decision.
What are doorstep loans?
Other terms used to refer doorstep loans include home credit loans or home loans. These are a type of unsecured, personal loan. It’s easy to understand doorstep loans because as the name suggests, it’s a type of credit that is delivered right at your doorstep. An agent of the lender will then visit your home each week to collect your loan repayments.
Doorstep loans provide customers with the chance to discuss their financial needs and personal circumstances face to face with the lender’s agent. Many people prefer this type of loan service because it allows them to manage their repayments right in the comforts of their own home at a certain time and day that they prefer.
Doorstep loans are short-term unsecured loans. You don’t usually need to give your bank details because most doorstep lenders deliver the funds to your home and you pay your loan in cash as well.
Most of these doorstep loans are settled within a short period, and interest rates are fixed all throughout the repayment period of the loan. With the fixed interest rate, you work out ahead of time and budget what you can afford to pay back on a weekly basis. No lump sum payment is needed for a doorstep loan.
Taking out doorstep loans
A lender’s agent would come to your home and delivers loan amount in cash. Collections are also done at your home, which provides you a personal service and a one on one discussion with an agent. These loans are normally small amounts. Although the lender will conduct a credit check, people with poor credit rating can be considered for a doorstep loan under certain circumstances. There are even doorstep loans for people on benefits or pensions.
Be sure about the amount of money you wish to borrow and decide on the repayment period. First, you apply online, and you’ll find out in a matter of minutes whether you are accepted in principle for a doorstep loan. The application process is completed at your home with the lender’s agent assessing and processing your loan request.
The lender’s agent will carry out an affordability assessment to make sure that the loan is affordable and workable for you. Certain requirements include proof of your ID, address, and your income. You also need to let them know of your expenses each month.
If your loan is approved, the agent will deliver the funds right at your doorstep, hence the name of the loan. The agent will do the same to collect your repayments each week.
Keep in my mind, however, that just like other types of debt, a doorstep loan can either have a positive or negative impact on your credit rating, depending on how well you make repayments. Making repayments on time will surely help you build or maintain a good credit rating.
You must make a written request on your application form for a doorstep loan lender’s agent to come to your home and legally discuss your loan. This is called “request to call,” which simply means you have agreed that the company’s representative or lender’s agent can come to your home and discuss with you the loan you are applying.
Are Doorstep Loans right for you?
The major benefit of doorstep loans is the convenience they provide. The fact that an agent will come to your house to process your loan, deliver the loan in cash, and then return every week so you can make repayments is definitely a great convenience.
You also get an opportunity to discuss with the agent personally and talk about your loan if you have any questions or problems.
If you have a poor or bad credit rating, a doorstep loan is a viable option for you as well. It will be an opportunity for you to improve your credit score, provided that you do not miss or delay any repayments.
The only disadvantage of doorstep loans is the interest rates. They are slightly higher than regular loans. You can understand this because of the convenience, the extra effort, and services of the agents that come with the nature of the loan.
Doorstep loans are small, short-term loans. Therefore, if you need more than £1,000 for your first loan, you might want to seek elsewhere.
The United Kingdom law says that doorstep loan lenders or home credit lenders have to be authorised by the Financial Conduct Authority (FCA). Agents of doorstep loan lenders don’t necessarily need to have their own FCA authorization. They can come under the authorisation of the lender that they represent.
You can check out the Register on the FCA website at www.fca.org.uk, to find out whether a home credit lender is authorised.
If someone offers to lend you money on the doorstep, don’t get too excited right away. Ask for their lender’s authorisation. If they cannot show you one, then they are operating illegally and you should avoid borrowing from them.
Majority of the doorstep loan lenders in the UK belong to the Consumer Credit Association (CCA) and follow the CCA Code of Practice. If you have any problem or concern with a lender or agent, you can complain to the CCA. If the complaint cannot be resolved with the lender or by the Consumer Credit Association, the complaint can be referred to the Financial Ombudsman Service.
Check out the CCA website at www.ccauk.org if you want to get more information about the Consumer Credit Association and its code of practice.
Doorstep loans can provide you with the money you need to cover urgent expenses, even with a poor or bad credit. They are small, short-term loans ideal for emergency expenditures only. They are quick and hassle-free to apply. Convenient as they are, you’ll get extremely high interest rates as compared to other traditional loans. If you decide to take out a doorstep loan, make sure the lender is authorised and legal.